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Study: Rent moratoriums could drive up rent, homelessness

Staff Report //August 12, 2020//

Study: Rent moratoriums could drive up rent, homelessness

Staff Report //August 12, 2020//

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As more than one-third of Americanƒ??s renters did not pay rent in June due to suspending housing costs, a Clemson researcher discovers that landlord regulation may prevent evictions but will also contribute to a shortage in affordable housing. (Photo/Provided)Stringent landlord regulation during the COVID-19 pandemic may lead to fewer evictions in the short term, but one study conducted by a Clemson University finance professor demonstrates that it could mean fewer people will be able to afford rent in the long term.

Lily Shen, assistant finance professor at Clemson, joined University of California-Irvine’s Edward Coulson and Georgia State University’s Thao Le to use a search model that showed that higher eviction costs for landlords would contribute to higher rents, a fall in housing supply, a lower vacancy rate and spike in homelessness, according to a news release. All predications were verified with U.S. Census data ranging from 2005 to 2016.

“Our research shows that in order to keep rental housing affordable and sustainable for low-income families, lawmakers have to walk a fine line in determining what will benefit the tenant and what may ultimately be detrimental to them,” Shen said in a news release. “On the surface, strict landlord regulation sounds good for tenants, but our paper points out, the solution isn’t that simple. The research suggests that conventional thinking on the issue of more regulation may have the opposite effect on tenants.”

The federal Coronavirus Aid Relief and Economic Security Act, passed in March, included provisions for a suspension on all evictions until late July with no evictions going into effect until late August, according to the release. Consequently, one-third of Americans didn’t pay housing costs in July, but about 30 state rent moratoriums have expired since May.

“Though advocating for tenant rights seems noble and the right thing to do, the resulting consequences could have a devastating impact on this vulnerable population,” Shen said in the release. “Our research indicates that if landlords aren’t allowed to evict, rent will likely increase to compensate for their losses. The housing supply would diminish, though the demand would still exist. These landlords may choose alternative investments if owning property is no longer feasible. A reduced housing supply would mean less competition, which would drive up the cost of rent for everyone.”